African Americans have a unique spending power, and businesses are starting to take notice.
Recent studies show that black consumers account for more than 1 trillion dollars in spending each year.
That’s a lot of money, and businesses would be wise to pay attention to the needs and wants of African American consumers.
So what do African Americans spend their money on? Read on to find out.
Editor Choice: Black Consumer Spending Statistics
- In the year 2019, African American households spent 2,429 U.S. dollars for food away from home on average.
- The typical Black household earns a fraction of White households—just 59 cents for every dollar. The gap between Black and White annual household incomes is about $29,000 per year.
- African-American buying power has seen impressive gains since the end of the last economic downturn, jumping from $961 billion in 2010 to an estimated $1.3 trillion in 2018. Since 2000, the African-American market has seen a 114 percent increase in buying power.
- Half of the total spend ($941 million) on dry grains and vegetables in the U.S. in 2017 came from consumers of colour. And Black consumers represented $147 million of the total spend in this category. (Nielsen)
- 11% of the black African American females and 13% males prefer to buy luxury or designer brands’ clothes.
- For low-income Black households, the top five aggregate expenditure share categories were housing (45.5 per cent), total food (23.5 percent), transportation (11.5 per cent), healthcare (4.1 percent), and entertainment (3.8 per cent). In comparison, the top five aggregate expenditure share categories for high-income Black households were housing (34.2 percent), transportation (17.1 percent), personal insurance and pensions (15.0 percent), total food (12.7 percent), and healthcare (4.8 percent).
1. In the year 2019, African American households spent 2,429 U.S. dollars for food away from home on average.
According to Statista, African American families spent an average of 2,429 U.S. dollars on meals consumed out from home in 2012. According to the findings, African Americans spend less money on meals while they are away from home than Asians and Whites. In terms of food expenditure, Asians spend the most ($4581), while Whites spend the least ($3636) while dining out at restaurants.
2. The typical Black household earns a fraction of White households just 59 cents for every dollar. The gap between Black and White annual household incomes is about $29,000 per year.
According to the Joint Economic Committee’s study “The Economic State of Black America 2020,” the average Black family earns a fraction of what the typical White household earns, earning just 59 cents for every $1 earned by the typical White household. The yearly income disparity between Black and White households is about $29,000 per year. This disparity in low-income indicates that African Americans are subjected to discrimination and have less chances.
( Joint Economic Committee)
3. African-American buying power has seen impressive gains since the end of the last economic downturn, jumping from $961 billion in 2010 to an estimated $1.3 trillion in 2018. Since 2000, the African-American market has seen a 114 percent increase in buying power.
A recent report from a reputable source indicates that African-American purchasing power has increased dramatically since the conclusion of the last economic crisis, rising from $961 billion in 2010 to an anticipated $1.3 trillion in 2018. Since 2000, the purchasing power of African-Americans has increased by a whopping 114 percentage points.
The rise in the black population, the attainment of more college degrees, and the establishment of black-owned companies have all contributed to the growth in purchasing power.
4. Half of the total spend ($941 million) on dry grains and vegetables in the U.S. in 2017 came from consumers of colour. And Black consumers represented $147 million of the total spend in this category.
According to Nielsen, consumers of color accounted for half of the total amount spent on dry grains and vegetables in the United States in 2017. Furthermore, Black customers accounted for $147 million of the total expenditure in this category. Black consumers are having a significant effect on the entire market, and in certain areas, they are spending more than half of their income on goods and services.
5. 11% of the black African American females and 13% males prefer to buy luxury or designer brands’ clothes.
According to the source, when rich American men and females were asked about their purchasing habits, the findings revealed that 11 percent of black African American ladies and 13 percent of males prefer to purchase clothing from luxury or designer labels. While 9 percent of white men and 6 percent of white women said they like expensive clothes, the majority of white women indicated they do not. This demonstrates that for black men and women, appearance and being well dressed are very important, and that they outperform whites in this regard.
6. For low-income Black households, the top five aggregate expenditure share categories were housing (45.5 percent), total food (23.5 percent), transportation (11.5 percent), healthcare (4.1 percent), and entertainment (3.8 percent). In comparison, the top five aggregate expenditure share categories for high-income Black households were housing (34.2 percent), transportation (17.1 percent), personal insurance and pensions (15.0 percent), total food (12.7 percent), and healthcare (4.8 percent).
Consumer Expenditure Survey data from the Bureau of Labor Statistics reveals the household expenditures of low-income Black families as well as high-income Black families, according to the Bureau of Labor Statistics (BLS). People who make less than $12,001 per year qualify as low-income blacks; those who earn more than $162,000 per year qualify as high-income blacks.
In this study, spending is split into five categories, and the findings reveal how much of a person’s total earnings % is spent on each category by low- and high-income African-Americans.
Housing (45.5 percent), total food (23.5 percent), transportation (11.5 percent), healthcare (4.1 percent), and entertainment (4.1 percent) were the top five aggregate spending share categories for low-income Black families (3.8 percent). Compared to other families, the top five aggregate spending share categories for high-income Black households were housing (34.2 percent), transportation (17.1 percent), personal insurance and pensions (15.0 percent), total food (12.7 percent), and healthcare (12.7 percent) (4.8 percent).
(Bureau of Labor Statistics)
7. Blacks who do own homes are just as likely as other homeowners to have spent between $1,000 and $2,000 on home improvements in the past year.
Blacks who do own houses, according to the source, are neither more or less likely than other homeowners to have spent between $1,000 and $2,000 on home renovations in the previous year. African Americans are spending more money on renovations and have plans to make additions to their homes in the future years, according to the National Association of Realtors.
(PR News Wire)
8. 72% of African Americans enjoy grocery shopping.
According to Statista, African Americans are the group of individuals that love doing their grocery shopping the most. In their 2018 study of customers who like grocery shopping depending on race, 72 percent of African American respondents said that they enjoyed grocery shopping, compared to 56 percent of White respondents and 61 percent of Asian respondents who expressed the same sentiment.
9. The percentage of Black homeowners decreased between 2005 and 2017 from 46% to 41.4% where it remained unchanged in 2018.
Black homeowners’ proportion dropped from 46 percent to 41.4 percent between 2005 and 2017, according to the source, and has stayed constant in 2018. Approximately half of the African American population does not own a home and instead lives in a rental property.
These higher rates for rental are due to the discriminatory policies towards the minorities.
10. 55 percent of African Americans used private health insurance in 2018, while 41.2 percent were enrolled in Medicaid or some other type of public health insurance.
Approximately 55 percent of African Americans had private health insurance in 2018, according to the Census Foundation, while 41.2 percent were enrolled in Medicaid or some other form of public health care. In other words, more than half of the black population is responsible for their own and their family’s health-care expenses; they are not covered by the government’s health-care assistance programs.
(the Census Foundation)
11. Low-income Black households have 4.1 percent of yearly spending on healthcare while high-income black households have 4.8 percent spending on healthcare.
The Bureau of Labor Statistics reports that low-income black families spend 4.1 percent of their annual income on healthcare, whereas high-income black households spend 4.8 percent of their annual income on healthcare.
(Bureau of Labor Statistics)
12. In 2019 Black consumers spent an average of $8,509 on transportation while White and all other races spent 11,070 and Asians spent 11,378 on transportation.
Black consumers spent an average of $8,509 on transportation in 2019, according to Statista, while White and all other races spent an average of 11,070 and Asians spent an average of 11,378 on transportation in 2019. Immediately after housing, transportation is the second most expensive area in which black people have spent the most of their money.
13. Nearly 86% of the spend Blacks make up on ethnic hair and beauty aids.
In accordance with the source, Black women spend almost 86 percent of their earnings on ethnic hair and cosmetic products. African Americans are the ones who dominate the beauty product business, accounting for 86 percent of the total $63.5 million spent on ethnic hair and beauty aids in 2010..
14. African Americans spend an average of 100% more than whites for each car insured.
The source claims that African Americans pay on average 100 percent more than whites for each automobile insured. Minorities pay a higher premium for auto insurance than the general public. According to the source, on average, 73 percent of African and American families possess a car, with an annual spend of about $1,581 on their vehicle. Minorities get less services, according to the source study, despite the fact that they pay more for insurance.
15. African Americans are voracious media consumers, across multiple channels, spending over 11 hours more each week using television (50:38 hrs per week) compared to the total population. “Internet on the go,” usage is increasing with more time spent on video, audio and social networking than the total population on both smartphones and tablets.
Time is money because spending money is the same as spending time, and time is money. Nielsen reports that African Americans are avid consumers of mass media across a wide range of platforms, spending almost 11 hours more each week watching television (50:38 hours per week) than the general population (see chart below). Smartphone and tablet users are spending more time watching videos, listening to music, and engaging in social networking than the general public, indicating an increase in “Internet on the go” use.
This makes them a more digitally savvy consumer in the market, and it also raises awareness for the rights of the community and the impact of black influencers in the market.
16. Black consumers are more likely than the total population to agree “I am willing to pay extra for a product that is consistent with the image I want to convey” (by 20%) and say clothes made by fashion designers are more appealing (by 22%).
According to the source, Black consumers are more likely than the total population to agree “I am willing to pay extra for a product that is consistent with the image I want to convey” (by 20%) and say clothes made by fashion designers are more appealing (by 22%).
As awareness is increased about the diversity and individuality among the black community, they are likely to choose those brands and products which are targeting them as a special market and catering to their needs to the fullest.
17. African-Americans use the Internet more across many topics, including entertainment, sports, dating, personal advancement and commerce. Black households with incomes between $75,000 and $100,000 are particularly active online.
By 20 percent, Black customers are more likely than the general population to agree that “I am prepared to spend more for a product that is compatible with the image I want to convey” and that garments designed by fashion designers are more attractive than generic clothing (by 22 percent ).
Due to increasing knowledge of the variety and uniqueness within the black community, people in this group are more inclined to patronize companies and goods that cater specifically to them as a particular market and meet their requirements to the greatest extent possible.
18. Nation’s total buying power reached $13.9 trillion in 2016 and predicts it will hit $16.6 trillion by 2021.
It is estimated that the nation’s overall purchasing power reached $13.9 trillion in 2016 and would reach $16.6 trillion by 2021, with minority groups seeing the greatest increases. According to estimates, African-American purchasing power will increase from $1.2 trillion in 2016 to $1.5 trillion by 2021, making it the biggest ethnic minority consumer market in the United States.
(University Of Georgia)
19. Black Consumers spent, on average, 525 U.S. dollars on personal care products/services while non-Black Consumers averaged 590 U.S. dollars in the same category.
Black consumers spent an average of 525 dollars on personal care goods and services in 2010, according to Statista, while non-Black consumers spent an average of 590 dollars in the same category.
When compared to previous generations, African Americans constitute a rising market in terms of consumer spending. There are more black-owned companies today than ever before, and they are making their impact on the global economy. Online time spent by black customers is increasing, and the black consumer of today is more knowledgeable and mindful of his or her choices. Black customers are increasingly concentrating their attention on businesses that understand their skin tone, color, and emotions better.
They are increasing their expenditures on education, and obtaining more education is assisting them in achieving better social status.
They are investing their money in real estate since half of the black population lives in rental properties. For many African Americans, the goal of owning a home is still a pipe dream.
Blacks are spending more on clothing and services because both black men and women like looking and feeling good in their clothes. As the number of black influencers on social media grows in this digital era, black consumers as a group are gaining in purchasing power and becoming a huge buying power.
Aside from the increasing spending and purchasing power of black consumers, they continue to be excluded from public assistance programs in many areas since they are a minority.
Q1: What are the different categories of spendings of United States people?
Ans: Housing is the area in which the people of the United States spend the most amount of their money because housing is a fundamental need on a very basic level. Statista estimates that white Americans spent $21,012 on housing in 2019, Asians paid $24,694 and Blacks spent $17,176 in the same year.
Q2: What African American are likely to spend the most?
The answer is that African Americans are more likely to spend more money on clothing, personal hygiene items, and services than other ethnic groups. The companies that effectively communicate the picture of their personalities and uniqueness are the ones that they choose.
Q3: What does a black-owned business mean?
ANSWER: A black-owned firm is defined as one in which African American owners control more than 50% of the company’s stock. The most well-known black-owned companies include RLJ Lodging Trust, Advent Capital Management, and Beauty Bakerie, to name a few.